Economic benefits of rural 4G vs investment cost is ‘a mixed picture’, says report

The report was carried out by consultancy FarrPoint and was tasked with analysing the economic and social impact that improved mobile connectivity can bring to different types of rural communities.

Data was gathered from four EE sites which were 4G improvement projects as part of the Shared Rural Network (SRN) programme, a government scheme designed to help speed up connectivity upgrades in rural and remote regions of the UK.

These sites ‘reflect a cross-section of different types of rural communities, of varying sizes and demographics’, says the report.

It focused on three factors – the initial construction impact, the general economic Gross Value Added (GVA) impact, and the social wellbeing impact – and concluded that all four sites demonstrated ‘notable benefits for the local communities.’

The benefits ‘varied significantly upon local characteristics’, and the report put the range between £249,000 and £6.9 million to different types of rural communities over a 15 year period.

Comparing the amount invested in individual mast sites and the impact that that investment has on the local community ‘leads to a mixed picture which is largely driven by the number of local residents covered by the improved 4G signal,’ claims the report.

At two of the sites, the social and economic benefits to the local community ‘considerably outweighs’ the cost of investment, and at the other two the benefits were calculated to be not as large as the investment made in the improvements.

Specifically, in the area covered by the Melton Mowbray (North) site in England, the benefits could amount to between £5 and £6.9 million, which is between 9.1 and 12.5 times its cost, and at Mallaig, in Scotland, the new site will deliver benefits in the range of £0.7 million and £1 million, which is between 1.3 and 1.9 times the investment made, we’re told.

Meanwhile, at Dunseverick in Northern Ireland, the socio-economic impact of between £353k and £518k is between £201k and £35k lower than the investment made, and the additional 4G spectrum added to the mast in Trawsfynydd in Wales could deliver between £383k – £249k in socio-economic benefits, which is ‘nearly half’ the investment that was made in the improvements.

To this point the accompanying press release from EE states: “While masts like the specific ones in Wales and Northern Ireland that serve smaller rural communities have higher overall costs, they are - in relative terms - a small proportion of EE’s entire mobile network which does generate an economic return, as well as significant benefits for the people and places it connects.

“That’s why, despite the technical, geographic and financial challenges to deliver fast and reliable 4G connectivity to remote areas, EE continues to deliver more than any other UK operator to connect rural communities.”

 Greg McCall, Chief Networks Officer at BT Group added: “Every rural community can benefit from modern mobile connectivity. This report provides evidence of how it is helping local businesses grow, supporting rural employment opportunities, and enabling more people to experience the benefits of the digital economy. That’s why we’re proud to have delivered on the coverage targets we committed to, helping to close the digital divide and ensure that the benefits of 4G connectivity are more widely felt in every corner of the UK.”

The claim that general socio-economic improvements, however accurately that can be measured, was calculated to be lower than the price of setting up the masts in the first place doesn’t tell the whole picture of how much financially an operator as whole might eventually financially benefit from expanding its network, or the potential costs of being perceived as having a lot of ‘not-spots’ on the service in the years to come. That too would be challenging to directly attribute to a single site.

Leaving that, and the latent implication that rural network upgrades are done out of corporate altruism (some form of which is included in most operator press releases related to the SRN scheme) aside, it is interesting to have some granular data points describing the economic realities of upgrading out of the way places with decent connectivity.